Enough wood for proposed NZ$180M plant

Friday 25 May 2018

Concerns that there may not be enough wood fibre to supply a new NZ$180 million particleboard plant proposed for Kawerau, NZ have been quashed by an industry study which concludes "there is more than enough wood available" although it notes the increased demand may push up prices in an industry dependent on low-cost supply.

China’s Guangxi Fenglin Wood Industry Group last year announced plans to establish a plant in Kawerau by 2020 to produce 600,000 cubic metres of panel boards a year and generate 100 new jobs, at an expected cost of NZ$180 million.
That prompted push back from some in the industry, with the Wood Processors & Manufacturers Association of New Zealand raising concerns that timber mills in the region didn’t produce enough wood fibre to supply the proposed plant as well as existing big pulp mills of Kinleith in Tokoroa and Tasman in Kawerau, which are owned by Japan’s Oji Fibre Solutions. Fenglin’s proposed plant is expected to initially produce particle board and later expand to medium-density fibre board (MDF).

"There is more than enough wood available to support an additional 700,000 cubic metres of domestic fibre demand," Finland forestry consultancy Indufor concluded in its evaluation of wood fibre availability for New Zealand Trade and Enterprise. "The question becomes the availability by fibre type (and hence fibre cost)."

Pulp log prices in New Zealand have remained remarkably static over recent years even though prices for other log types have surged higher. Data from NZX's agricultural analysis business AgriHQ shows average national pulp log prices have fallen over the past six years, from $52.60 a tonne in the first quarter of 2012 to $50.50 a tonne in the first quarter of this year. That's in contrast to other log prices, with A-grade export logs surging from $82.70 a tonne to $131.30 a tonne over the same period, and domestic S1 logs jumping from $98.40 a tonne to $131.20 a tonne.